The European Central Bank
said Thursday it cut its refinancing rate to a historic low of
0% and expanded its quantitative easing (QE) or massive
bond-buying programme.
The new package of six monetary stimulus measures aims "to
further ease financial conditions, stimulate credit, and
strengthen" the recovery, ECB President Mario Draghi said.
In the new package of four Targeted Longer-Term Refinancing
Operations (TLTROs), Draghi said, the more banks lend the lower
the rate will be, starting from the zero of the main refinancing
rate.
The ECB raised the purchase limit of each individual bond
issue in its QE programme from 35% to 50%, he added.
The ECB expects rates to remain at their current record
lows "for a long time, well beyond the time frame of the (QE)
purchases" being made, Draghi said in a clear message - expected
by markets - on the forward guidance of interest rates.
Also on Thursday, the ECB cut eurozone inflation forecasts,
from 1% to 0.1% this year and from 1.6% to 1.3% in 2017.
Inflation is expected to reach 1.6% in 2018, Draghi said.
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